TRANSCRIPT: A look at Chinese stock markets,
News roundup on big new Chevron gas deal, the
new population time bomb, a new real estate exchange
traded fund, and IPOs...plus Merry Christmas!
Sinomania! Volume I Webisode 43, December 20,
2007
Markets List,
A Business News Roundup,
The TAO of Real Estate?
And IPOs!
MARKETS LIST
The Shanghai Composite closed at 5,043.54 today
up slightly from its slump to just above 4,800
on November 28. The CSI 300 Index ended at 5,037.20
December 20 back up past 5,000 for the first time
in a week. Shanghai B shares continue to flounder
since our last episode and closed today at 354.58.
ShenZhen Bs continue their slide and closed December
20 at 679.18 although they are still above the
end November trough. With performance like this
it appears that investor confidence is weakening
particularly in B shares. But remember B shares
remain the best performers in the world as 2007
draws to a close. The Hang Seng Index is back
up above 27,000 after falling all week. This level
could be a new baseline as I don't see the Hang
Seng falling back to the levels of last summer.
In money matters, excessive liquidity continues
to bother Chinese regulators and fuel inflation
and risks of over capacity in certain investment
sectors. Interest rates were raised again this
week by China 's central bank, the benchmark one
year lending rate upped to just under seven and
a half percent, the highest level in almost a
decade.
And Chinese capital is finding its way back to
America. The national sovereign wealth fund China
Investment Corp. will make a five billion ($US)
cash infusion to Morgan Stanley which posted the
first loss in its history due to so-called "sub-prime"
bad loans. Morgan Stanley is a long established
China booster and major underwriter of Chinese
IPOs. The investment is the biggest to date by
China's new state investment fund in an American
business.
NEWS ROUNDUP
A couple of interesting news items worth noting
this week:
International companies grabbed almost twenty
five percent of television advertising during
China's "golden period," the sixty seconds of
advertising space after Xinwen Lianbo, the country's
top rated news show. Last month, over $1 billion
US dollar value ad revenue was sold in the yearly
auction by China Central Television.
Oil major Chevron signed a 30-year joint production
deal with China National Petroleum Corporation
PetroChina subsidiary Southwest Oil and Gas Field
to develop the Chuandongbei gas site in Sichuan
province. Chuandongbei covers around 2,000 square
kilometers in the heart of China and may hold
five trillion cubic feet of natural gas. The facilities
planned for the region could produce up to 740
million cubic feet of gas per day.
Some new figures on the coming demographic crisis
in China were released by the Chinese National
Committee on Aging this week: Already over 20%
of the world's elderly people live in China and
their number is increasing at three times the
rate of China's natural increase. As in the USA
the number of people reaching the age of 60 and
above is increasing rapidly. The older population
is set to rise from just above 11% currently to
around 25% by mid century. Chinese population
authorities warned that economic progress may
suffer and that China is not prepared for a rapidly
aging society. This is an interesting trend with
important implications for investors - something
to watch closely.
NEW PROPERTY ETF
Here's a new ETF - the Claymore/AlphaShares China
Real Estate ETF now traded on the New York Stock
Exchange with symbol TAO.
The China Real Estate ETF is the first vehicle
to give investors a chance to invest and profit
from the Chinese real estate boom and with the
tax benefits of an exchange traded fund. The ETF
will invest in listed property development and
real estate firms on Chinese exchanges invested
in mainland China, Hong Kong, and Macau - the
Chinese Las Vegas. The ETF will be reconstituted
annually.
TAO was up almost 3% on December 20 with shares
currently selling for around $25 US dollars in
New York.
IPO REPORT
Speaking of property investing, SouFun Holding,
an online real estate broker based in Beijing
is planning an IPO on either Hong Kong or New
York. SouFun is part owned by Australian telephone
company Telstra whose American CEO Sol Trujillo
is looking to use SouFun as a cornerstone of increased
China business. Property prices are rising in
Chinese cities, up almost 9% in September, and
can only benefit from China's endless urbanization.
Meanwhile recent Chinese IPOs have seen mixed
results. Internet content firm Pacific Online
fell almost 20% off its offer price on December
18 in Hong Kong. SinoTruck has yet to trade
above its offer price also on the Hong Kong exchange.
But Uni-President China Holdings surged
on Hong Kong Monday.
Grand Ocean Department Store, out of Nanjing,
plans an IPO early 2008 and hopes to raise up
to $200 million US dollars for expansion. The
company currently has nine outlets in Fujian and
Zhejiang provinces.
An important development for Hong Kong IPOs -
starting January 2008 new listings will be required
to publish final draft prospectuses on the Hong
Kong Exchange website so more transparency coming!
For my Christian viewers I'd like to say Merry
Christmas!
